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Brother, Can You Spare $6 Trillion?

ROME — The Italian police on Friday arrested eight people on charges related to the seizure of $6 trillion in fake United States Treasury bonds, in a mysterious scheme that stretched from Hong Kong to Switzerland to the southern Italian region of Basilicata.

The value of the seized bonds is in the neighborhood of half of the United States’ entire public debt of $15.36 trillion, but only the uninitiated would have accepted them as real securities. Rather than counterfeit, they were what officials call fictitious, printed in 6,000 units of $1 billion each, a denomination that does not exist and the equivalent of $3 bills, American officials said.

In a statement on Friday, the United States Embassy in Rome said its experts had examined the bonds, which bore the date 1934, and determined that they were fictitious and apparently part of a scheme intended to defraud Swiss banks. It was unclear whether the bonds were ever used for that purpose.

The arrests on Friday, on fraud and related charges, were part of a broader investigation of organized crime in the Basilicata region, the instep of Italy’s boot, prosecutors in Potenza said in an e-mailed statement.

The prosecutors said they had found the bonds — along with a fake copy of the Treaty of Versailles, signed by European powers at the end of World War I — in special compartments in metal crates in a Swiss vault, which the Swiss authorities had sent them last fall following a request for cooperation.

“We had heard that they weighed a lot, but frankly we didn’t expect to find that kind of material,” Giovanni Colangelo, the chief prosecutor in Potenza, said in a telephone interview on Friday.

Photo

One of the fake Treasury bonds — there is no $1 billion denomination.Credit
Stringer/Italy/Reuters

He said that prosecutors had heard about the fake bonds through wiretapped phone conversations. In 2010, the authorities in the Lazio region seized four fake bonds, each printed with the value of $500 million, but he said the mother lode was found in the vaults moved from Switzerland last fall.

One of the eight men arrested had moved the $6 trillion in fictitious bonds from Hong Kong to a Swiss deposit in 2006, Mr. Colangelo said. He said the origins of the bonds were unknown, but added that authorities had also seized a fake will, which was said to be part of a scheme in which a suspect would claim to have inherited the bonds and try to use them to open credit lines at a bank.

Prosecutors said they had also picked up wiretapped phone conversations in which the suspects talked about buying plutonium from Nigerian sources. They did not provide further details, but Mr. Colangelo said their efforts did not come to fruition.

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In the statement, prosecutors said that the false bonds “posed concrete and grave dangers for the stability of the international credit system.”

But American officials said the phony bonds were fairly routine. “This is just a scam, very frequent, very common,” said Brian Leary, a spokesman for the Secret Service. “Our agents provided Italian authorities with expertise that these notes are fictitious instruments, as we refer to them, which are commonly used as collateral, say for a loan.”

According to the Federal Reserve, such “fictitious instrument fraud” is increasingly common, and unwitting investors have been cheated of nearly $10 billion in recent years.

In a common ploy, “criminals present fictitious financial instruments such as Federal Reserve notes, standby letters of credit, prime bank guarantees or prime bank notes in order to fraudulently collateralize loans,” the Federal Reserve says on its Web site.

In 2009, Italian police seized phony United States Treasury bonds with a face value of $250 billion.

Elisabetta Povoledo contributed reporting.

A version of this article appears in print on February 18, 2012, on Page A4 of the New York edition with the headline: Brother, Can You Spare $6 Trillion?. Order Reprints|Today's Paper|Subscribe